Just who owns the U.S. national debt?

Info on the national debt (which is different from the trade deficit)...

March 4, 2007 - And is growing foreign investment in the U.S. bad for America?

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The money is borrowed from buyers of Treasury securities -- which are basically a big batch of IOUs that are auctioned off every three months. As the auction date approaches, the Treasury figures out how much it will need to pay off old debt and cover the government’s latest round of overspending. When the auction day comes, buyers submit bids in the form of the interest rate they’re willing to accept. You can choose to make a competitive bid (you ask for a specific rate) or a non-competitive bid (you agree to accept the average rate of other winning bids.) When all the bids are in, the Treasury starts at the bottom, taking the lowest bids until it has collected enough money to cover that round of borrowing.

The money flows in from all over the place: from individual investors and corporations, pension funds and governments, both in the U.S. and around the world. Basically, anyone with a large amount of cash looking for a safe place to put it is a good candidate for holding U.S. Treasury debt. So just who are these lenders? As of last June (the latest complete breakdown available), the biggest holder of Treasury debt was the U.S. government itself, with about 52 percent of the total $8.5 trillion in paper that's out there. Most of the government’s holdings are massive savings accounts for programs like Social Security and Medicare. Just as you may prefer to keep your Individual Retirement Account in the safe Treasury bonds, the folks who manage the Social Security Trust Fund are looking for a secure investment, too.

That’s leaves a little over $4 trillion in public hands. The biggest chunk (about 25 percent of the $8.5 trillion total) is held by foreign governments. Japan tops the list (with $644 billion), followed by China ($350 billion), United Kingdom ($239 billion) and oil exporting countries ($100 billion). Other big holders of Treasury debt include state and local governments ($467 billion); individual investors, including brokers ($423 billion); public and private pension funds (319 billion); mutual funds ($243 billion); holders of US savings bonds ($206 billion); insurance companies ($166 billion) and banks and credit unions ($117 billion.)

FULL http://www.msnbc.msn.com/id/17424874/

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Gotta keep the Chinese buyin' dem T-bills...

US lawmakers introduce bills meant to boost cooperation with China
2 Aug 2007, Four US lawmakers introduced legislation that would expand the US diplomatic presence in China, promote US exports to China and increase Chinese language training and energy cooperation between the countries.

One bill authorizes a new consulate in Wuhan, with a population of about 9 million, and 10 smaller diplomatic posts in cities with more than a million people. Another would help US states establish export promotion offices in China, help small US businesses stage China trade missions and arrange grants for Chinese business education programs.

US critics say China keeps its currency undervalued by up to 40 percent. They say that gives Chinese exporters an unfair price advantage and widens its yawning trade gap. Last year, the US trade deficit with China reached a record $235 billion (euro172 billion).

Other bills introduced would authorize new grants to fund US-China energy and climate change education programs and increase Chinese cultural studies and programs for U.S. students eager to study Chinese. The lawmakers are Republican representative Mark Kirk and Democratic representaives Rick Larsen, Susan Davis and Steve Israel.

Source

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US official presses China on currency reforms
8/1/2007 • US Treasury Secretary Henry Paulson renewed efforts in meetings with top leaders yesterday to persuade China to allow faster currency appreciation and wean itself off exports by adjusting consumption.

The former Goldman Sachs chief executive met with Chinese Vice Premier Wu Yi and central bank governor Zhou Xiaochuan in the latest round of a bi-annual economic strategic dialogue between the two nations. Paulson, who helped establish the talks in 2006 to ease trade tensions between the two economic powerhouses, is to meet President Hu Jintao today.

His visit comes amid growing pressure to reduce the yawning US trade deficit with China and moves in the US Congress to punish Beijing for what some say are unfair trade policies. The three-day visit began Monday in China’s vast and poor northwestern province of Qinghai, where he inspected a range of environmental protection projects.

“I am sure your visit to Qinghai will deeply enrich the material you can present to Congress in future testimony,” Wu told Paulson after a one-on-one meeting. “In making this contrast, you can understand — who could China threaten?”

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Smoke and mirrors...

Fuzzy Bush math
September 4 2007: You're about to hear that the budget deficit is falling. Don't believe it, warns Fortune's Allan Sloan. The deficit is much, much bigger than you think.

There will be lots of celebrating in Washington next month when the Treasury announces that the federal budget deficit for fiscal 2007, which ends Sept. 30, will have dropped to a mere $158 billion, give or take a few bucks. That will be $90 billion below the reported 2006 deficit, and will be toasted by the White House and Treasury as a great accomplishment. But I have a nasty little secret for you, folks. If you use realistic numbers rather than what I call WAAP -- Washington Accepted Accounting Principles -- the real federal deficit for the current fiscal year is more than 2 1/2 times the stated deficit.

Why am I inflicting this information on you? Because there's been so much joyous noise about the budget emanating from Washington, despite the subprime mess and market meltdowns (which don't bode particularly well for future tax collections), that my natural contrarianism makes me feel like bombing the buzz machine. In addition, so many investors (and speculators) are fleeing to the supposed safe haven of Treasury securities lately that it's a good time to take a look at what's really going on with the federal budget.

If a publicly traded corporation tried keeping books the WAAP way rather than the GAAP (Generally Accepted Accounting Principles) way, its auditors would be on the phone to the SEC before you could say "Sarbanes-Oxley." But this is the federal government, which operates its unique budget accounting system regardless of which party's running the show. Making the deficit look smaller than it really is helps whoever's in power, be it today's borrow-and-spend crew or yesteryear's tax-and-spenders.

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Just who is running our banks???...

Prince Alwaleed: Why Chuck had to go
November 8 2007: In a Fortune exclusive, Citigroup's biggest single investor talks about his disappointment in Chuck Prince, the bank's colossal losses, and his views on a successor CEO.

In the midst of staggering losses and intense public scrutiny, former Citigroup CEO Charles O. Prince III could always count on the support of the company's biggest individual shareholder: Prince Alwaleed bin Talal bin Abdul Aziz al Saud. Less than a month ago, the Saudi prince, who owns 3.6% of the company, even dismissed a sharp drop in earnings as a "mere hiccup."

But Fortune has learned that Prince Alwaleed and other major shareholders agreed last week that, if Chuck Prince didn't offer his resignation after the news of the additional $8 billion to $11 billion writedowns, they would publicly call for his ouster. In an exclusive interview, Prince Alwaleed, speaking by phone from the desert outside Riyadh, talked with Fortune's Andy Serwer and Barney Gimbel about the final days of Chuck Prince's tenure at Citigroup (Charts, Fortune 500).

Fortune: When Citigroup first reported the writedown three weeks ago, you said that you supported Citi and Chuck Prince. Do you feel like you were misled? Did the situation change? What happened there?

Prince Alwaleed: Let me tell you the facts. Basically when Citigroup pre-announced the $6 billion writeoff [Editor's note: this is not precisely the write-off that Citigroup reported on Oct. 15, but it is the figure the prince uses], Chuck Prince called me within five minutes of the announcement and informed me of that loss and I told him bluntly and openly, "Is this the end of the story? Did you think of everything?"

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And we wonder why gas is $3/gallon, proof we're being gouged on oil...

Saudi current account surplus reaches record level of 95.5 billion dollars
Saturday 10th November, 2007 : The International Monetary Fund (IMF) says in a report that Saudi Arabia's current account surplus in 2006 reached a record level of 95.5 billion dollars, representing 27.4 percent of the country's GDP.

What is more impressive is that this record level surplus has been achieved despite a 29 percent increase in imports of goods. The IMF praised Saudi Arabia's macroeconomic performance, which in a report said that that strong performance was underpinned by buoyant private sector activity, prudent economic policies and a further increase in oil prices.

The report stresses that the large overall surplus generated from high oil prices has enabled the government to reduce its gross domestic debt by 11 percentage point to 27.9 percent of GDP.

One of the points raised in the report is that although oil production fell by 1.5 percent of the GDP in line with OPEC's decision to cut output, non oil growth rose to 6.3 percent backed by an expansionary fiscal policy and rising private sector activity. The Saudi Government is currently trying to increase the country's oil production capacity through an 80 billion dollars investment programme.

Saudi current account surplus reaches record level of 95.5 billion dollars

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Gee, guess Congress will want another raise now...

Federal Liabilities Now Equal $175,000 for Every American
November 08, 2007 - Deficit spending and promised benefits for federal entitlement programs have put every man, woman, and child in the United States on the hook for $175,000, says a new report by David Walker, comptroller general of the United States.

On Tuesday, Walker sent the results of his audit of the federal debt to Treasury Secretary Henry Paulson. The audit revealed that, as of Sept. 30, the last day of fiscal year 2007, the U.S. government owed $8.993 trillion. Of this nearly $9 trillion in debt, $5.049 trillion is in the form of Treasury securities held by the public, while the other $3.944 trillion is in the form of loans made to the Treasury from "surpluses" in the trust funds of federal entitlement programs, including the Social Security, Medicare, military retirement, and civic service retirement programs.

In addition to this debt, which represents money the federal government has already spent, the government also faces a gap between the projected revenue expected from the current tax structure and the spending that will be required to cover promised benefits in Social Security, Medicare, Veterans Administration and other entitlement programs.

"If these items are factored in," Walker said in his report, "the total burden in present value dollars is estimated to be about $53 trillion. Stated differently, the estimated current total burden for every American is nearly $175,000; and every day that burden becomes larger." Of the $5.049 trillion in debt currently held by the public, $2.22 trillion is held by foreign investors, Walker calculated. "[T]o service this foreign-held debt," Walker said, "the U.S. government must send interest payments abroad, which adds to the incomes of residents in other countries rather than to the incomes of U.S. residents."

In fiscal 2007, the federal government owed $433 billion in interest on the money it had already borrowed and spent. Of this $433 billion, $239 billion was paid in interest on Treasury bonds, and the other $194 billion was added, on paper, to the money that the Treasury already owes to the entitlement program trust funds. Over 25 years, the federal debt grew almost eight-fold, from $1.142 trillion in 1982 to $8.993 trillion in 2007.

Source

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Might be a good time to start learnin' Mandarin...

China controlling more of U.S. economy
Fri., Dec. 21, 2007 - Country leads surge of foreign investments in Wall Street banks

There's a good reason schools across the country are scrambling to find people who can teach Chinese: It's quickly becoming business' second language as Wall Street seeks to tap China's $1.3 trillion in foreign reserves. China has been making increasingly aggressive investments in some of the world's most prestigious financial companies in recent months — most of them American. Morgan Stanley, Bear Stearns, Blackstone Group, and Britain's Barclays have all negotiated major stakes by Chinese government-controlled investment funds.

Investment banks ailing from the subprime mortgage mess are looking for money to shore up their balance sheets. And China is leading a surge of strategic investments from Asia and the Middle East that so far have sunk about $25 billion into Wall Street banks. That's just the start of what some believe is a dramatic reversal of financial power in the shadow of Wall Street's credit turmoil.

"Both Chinese private and government interests are controlling more and more of the U.S. economy, and this is a result of the big trade and budget deficits we have," said Alan Donziger, professor of economics at Villanova School of Business. "These investments will make the U.S. somewhat less independent, but this is inevitable when we live in a global economy." To be sure, Wall Street's current predicament is "our own doing," he said. Turmoil in the credit markets have been fueled by defaults on subprime mortgages, and that's caused the Federal Reserve to attempt a bailout of the industry through interest rate cuts.

More China controlling more of U.S. economy - World business - MSNBC.com

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Deficit gets bigger...

Federal Budget Deficit Swells
Wednesday, Mar. 12, 2008 (WASHINGTON) — The Treasury Department says the federal deficit swelled to $263.3 billion in the first five months of this budget year as record spending during the period outpaced record revenues.

The department's latest snapshot of the government's balance sheets, released Wednesday, shows that the deficit for the budget year that began Oct. 1 was up a whopping 62 percent from the red ink of $162.2 billion for the corresponding five-month period last year. The latest year-to-date budget deficit of $263.3 billion was an all-time high, the government said. Spending totaled a record $1.23 trillion, while revenues totaled $967.2 billion, also an all-time high.

For the month of February alone, the government ran a deficit of $175.6 billion, a record for any single month. That was larger than the shortfall of around $170 billion that economists were expecting. One of the reasons the deficit was running higher was related to a calendar issue, the Congressional Budget Office said. Because March 1 fell on weekend, payments that the government would ordinarily have made in March were instead made at the end of February. That caused spending to be higher in February, contributing to the larger budget deficit.

The White House predicts that the deficit this year will increase to $410 billion, as the economic slowdown cuts into tax revenues. Many analysts predict economic growth will be feeble in the January-to-March quarter; a growing number believe the economy is actually shrinking now. Under one rough rule, the economy would need to contract for six straight months to be considered in a recession.

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We still goin' inna hole...

Federal Deficit Soars
07/16/08 - Congress and the White House are driving up the deficit, alarming budget hawks as the government responds to the sputtering economy.

The nonpartisan Congressional Budget Office (CBO) has estimated that, for the first nine months of fiscal 2008, the government incurred a $268 billion deficit. That’s $148 billion more than a similar period last year — although about half that increase went toward economic stimulus checks. And much more spending is on the way. “We’re spending like a drunken sailor,” said Sen. Jeff Sessions (R-Ala.), who predicted the deficit would double this year. But in an election year dominated by domestic concerns, and with the government moving aggressively to address the economy, attacking the swelling budget deficit is not high on the agenda of either party.

“When there is an economic downturn, as we’re experiencing, you expect deficits to jump,” said Sen. Kent Conrad (D-N.D.), chairman of the Budget Committee. “I think it would be very helpful if we were demonstrating something about the long term.” Political rivals have engaged in election-year finger-pointing. The Bush administration blames Democrats for not dealing with the nation’s entitlement programs; Democrats on the Hill fault President Bush for the cost of the Iraq war. The White House Office of Management and Budget (OMB) projected in February the country would have a $410 billion deficit at the end of fiscal 2008, but that will likely be a larger figure when it releases revised numbers later this month.

The national debt, which refers to the cumulative amount the government has borrowed and not repaid, is almost $9.5 trillion, the highest level in U.S. history, according to the Treasury Department. The deficit is the amount of spending that exceeds tax revenue in a fiscal year. Congress first responded to the turmoil in the financial markets by approving legislation in February that sent rebate checks to millions of Americans, driving up the deficit by $152 billion this year.

More TheHill.com - Federal deficit soars

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White House projects record '09 deficit...

Bush administration projects record '09 deficit
Mon., July. 28, 2008 WASHINGTON - Deficit for next year to hit $482 billion amid sagging economy

The next president will inherit a record budget deficit of $482 billion, according to a new Bush administration estimate released Monday. The administration said the deficit was being driven to an all-time high by the sagging economy and the stimulus payments being made to 130 million households in an effort to keep the country from falling into a deep recession. But the numbers could go even higher if the economy performs worse than the White House predicts.

The budget office predicts the economy will grow at a rate of 1.6 percent this year and will rebound to a 2.2 percent growth rate next year. That’s a half percentage point more than predicted by the widely cited “blue chip” consensus of leading economists. The administration also sees inflation averaging 3.8 percent this year, but easing to 2.3 percent next year — better than the 3.0 percent seen by the blue chip panel. “The nation’s economy has continued to expand and remains fundamentally resilient,” said the budget office report.

A $482 billion deficit, however, would easily surpass the record deficit of $413 billion set in 2004. The deficit numbers for 2008 and 2009 represent about 3 percent of the size of the economy, which is the measure seen as most relevant by economists. By that measure, the 2008 and 2009 deficits would be smaller than the deficits of the 1980s and early 1990s, when Congress and earlier administrations cobbled together politically painful deficit-reduction packages.

More White House projects record '09 deficit - Stocks & economy - MSNBC.com